As we've already known, there was important event today: RBA Interest Rate decision.
Interest rate decreased 0.25%, from 2.75% to 2.5%. Everything happened as many analysts expected.
Since interest rate decreased, some of you might think that AUD must decline after rate cut. Well, let's watch this:
AUDUSD: +0.63%
AUDJPY: +0.46%
EURAUD: -0.51%
GBPAUD: -0.61
AUD has been rising after rate cut but why? This is called "buy the rumour, sell the fact" and Wikipedia explains:
Therefore, if you are not experienced traders, especially beginners, you should never try to trade on news release.
Interest rate decreased 0.25%, from 2.75% to 2.5%. Everything happened as many analysts expected.
Since interest rate decreased, some of you might think that AUD must decline after rate cut. Well, let's watch this:
AUDUSD: +0.63%
AUDJPY: +0.46%
EURAUD: -0.51%
GBPAUD: -0.61
AUD has been rising after rate cut but why? This is called "buy the rumour, sell the fact" and Wikipedia explains:
"Buy the rumor, sell the fact": This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought". To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Therefore, if you are not experienced traders, especially beginners, you should never try to trade on news release.
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